I want to talk a little bit about the board of directors of a company.
It all begins because you have a dream. You want to be the commander of a spaceship, just like Captain Jean-Luc Picard. You want to design and build the kind of a spaceship that has never been seen before, and you want to take your ship with the help of your loyal crew (this exact team that you actually haven’t started recruiting yet..) to a place “where no man has ever gone before… ( at least not voluntarily..)” .
You know what you need to do, because you are a one hell of a person. It’s really not complicated…All you’ve got to do is:
1. Raise money to build ship (and it comes together with a board member, for free..)
i. Build team of ship designers and builders
ii. Design ship (report to and consult with your director)
iii. Build the damn ship..
iv. Consult, report, discuss open issues with your one-man-board
v. Solve expected problems..
vi. Solve unexpected problems (consult with Director #1)
2. Raise more money – this time for team building and equipment: you will need low calorie food, red and blue laser weapons, atomic fuel, cool black flights vest, tiny communication buttons you put on the cool flight vests, Oxygen, entertainment to employees…) (Director #2 joined in)
i. Continue building team –you know.. Science Officer Data, Strategic Operations Officer Commander Worf, Chief Engineer La Forge, Chief of Security Tash, Chief Medical Officer Beverly.
ii. Launch the God-Damn ship…
iii. Consult, report, discuss the issues with your two-man-board
iv. Solve expected problems in flying ‘this-thing-that-doesn’t-look-like-a-ship-yet’ for the 1st time..
v. Solve unexpected problems in flying the ship for the 1st time ..
vi. Solve some more unexpected and apparently insolvable problems…
vii. Get ready to raise more money (consult with Directors #1 and 2 )
3. Raise more money – (welcome Director 3 and 4 ) -you need more of everything (the whole list… plus some value-size packages of Valium pills)
i. Things are going slower than expected (and that’s the good news..),
ii. You lost 18 months because you were going the wrong direction…
iii. You and your amazing team discover new facts which require building new functionalities,.. or changing course,.. or changing mission..
iv. You still need to solve same unexpected problems mentioned in paragraph 2.a.i.1.a.i above..
4. Raise more money…you are not there yet.. although you are getting there.. slowly.. very..(Director..)
So, you suddenly find yourself, 2 or 3 years down the road with a new creation… and NO, its not the ship.. it’s something that, frankly, wasn’t on your ‘to-do’ list, but its very much there right now and its not going away any time soon: “WELCOME TO YOUR OWN BOARD OF DIRECTORS”… please try to enjoy the ride.. and don’t look for emergency exits…because on THIS ship there aren’t any …
There are many types of boards: one of them is the functioning board… an even worthier kind is the ‘Fun ‘nd Functioning board’. And then there are the rest of them … with one common denominator grouping them all together: These are the ‘Neither Functioning Nor Fun boards’. At that stage of your adventure you begin to realize the importance of ‘Fun ‘nd Functioning board’.. either because you are so lucky and smart to have already built one, or because you are neither lucky nor smart…
So there you are, flying your space-ship ten thousand light-years away from home, with your tired but very loyal and still motivated crew around you, together fighting the bad creatures, overcoming challenges and dealing with uncertainties... and you need help, a lot of it: you need moral help, you need faith, you need resources and you need a calm group of people that will help you analyze the situation and make the right decisions fast (as opposed to slow decisions, or no decisions, slow..). This is where you begin to realize that matters such as ‘brand name’, ‘contact list’, and even the so called ‘experience in the relevant space’, although important, …. are absolutely not sufficient in choosing your board members, and, frankly, not even mandatory.
Talking about mandatory: personal chemistry cannot be replaced with anything unless you are the masochist type (happens); you want your board to talk the same language, to trust you and share your vision and to be ready to do whatever is required to get there; you want your board to be calm and not hysterical; to be supportive and not judgmental; to be quick and responsive and not tedious, to have big balls and not to vanish when the going gets tough;
In short, you really want the individuals on your board to become a one coherent, unified, functioning, mentally durable, and positive small team of friends.. (by the way, the Pitango partners are known for being not only that, but also spontaneous, and good-looking with a great sense of humor…). And you expect this group of friends to be your primary resource of energy, mental support, attention and patience, advise and guidance and..ah yes, to be able to put as much money as required to pull that thing off the ground. In times, you would also expect them to be there and help you hear the truth..
You want and you want and you want….. so what to do? Bottom line is that selecting and then managing your board is a very serious aspect of your business. You must be aware of it and you must take ownership on doing that. No one, except for you, can or should, build the composition of your board, and no one except for you should manage it.
I asked one of my more experienced CEOs, Israel Mazin, the founder of Optier www.optier.com, to give his input on the issue and here is what he came with:
1. “ Take partners/board members that you have chemistry with and have the same vision for the company.
2. Have experienced board members in the company space.
3. The CEO needs to lead the board and be the coordinator between the board members and try to build a board consensus around the moves he is planning.
4. He must keep the board members informed and updated all the time (good and bad news).
5. He should make sure he has behind him strong, big, rich and experienced VCs”.
A few more tips in choosing your board:
Keep your board small! it takes less time listening to what 5 distinguish board members have to say about the same all-ready-agreed-upon-non-important-matter than to listen to 9 distinguished...
Conduct due diligence on your potential investor – talk with others he invested in. one question that is worth asking is “Is he the 1st director you choose to call with bad news or is he the ‘I just-want-the-good-news’ guy”..
The philosophy of the fund behind your board member is not less important (issues like – backing and supporting portfolio companies in tough times; ability to support the more aggressive vision of creating a big company). Make sure that you know what it is and that it suits your attitude.
Size, size, size… matters, matters, matters! If you want to go big, make sure your board members (and the funds they are representing) can support it, both vision and resource wise.
Build a small core group of board members that begin from day one, and add to them along the way other investors that will join that core group and will accept its way of working. Do not! Do not make this pity-full and miserable mistake that does happen every once in a while, of not getting along too well with your board of directors and then falling in love with the new investor/board member, hoping that he will save you from your misery. 1st of all, he will not! 2nd, you piss your entire board, and 3rd, you didn’t solve the problem.
1st director on board is the most important one… so call: 1800-my-1st-board member.. Or u can also try my office number 09-9718121.